The buy-to-let rental barometer from Fleet Mortgages showed East Anglia, West Midlands and the South East were the only regions to report yearly increases in average rental yields.
Yields in East Anglia rose by 1.4 per cent to 6.8 per cent, West Midlands saw a 0.6 per cent increase to 6.7 per cent and the South East reported a 0.1 per cent uptick to 5.5 per cent.
Of the regions to see a decline, the change was relatively muted with the exception of the North West and East Midlands where decreases in average rental yield fell by more than one per cent.
The North East reported the highest rental yield for the sixth consecutive quarter, with a slight decline from eight per cent to 7.9 per cent compared to Q4 2020.
Fleet said it expected tenant demand to remain strong throughout 2022 but said although existing landlords were adding to their portfolios, overall supply within the private rental sector (PRS) was unlikely to meet demand.
However, it said there would also be supply issues for prospective homeowners meaning the PRS would be left to fill the housing gap, resulting in rental yields maintaining good levels.
Steve Cox (pictured), chief commercial officer at Fleet Mortgages, said: “Our new rental barometer, covering the last three months of 2021, shows that rental yields are keeping pace with property prices which have risen by approximately 10 per cent over the last 12 months. This is good news for the private rental sector and landlord borrowers.
“In terms of how this might impact landlord activity, it looks increasingly positive for 2022 particularly as professional investors review the recent capital increases in their properties and make the most of them via refinancing in order to secure the deposits required for new purchases.”
He added: “2022 has been described as a big year for remortgaging in the buy-to-let space, and that looks highly likely, but it will be remortgaging with a reason for existing landlords, who tend to capital raise in order to secure the funds they need for portfolio growth.
“With these yield figures showing a strong yearly return possible across most regions of the UK, and with house prices likely to continue on an upward trajectory due to a continued lack of supply, property investment and buy-to-let is likely to retain its allure.”
